Regressive Tax
Regressive Tax
Subject: Argument for Implementing Regressive Income Tax
The primary income taxation structure in the United States should be a regressive tax structure. A regressive tax rate decreases with an increase in the tax base. This means, the lower the amount of income a person earns, the greater the share of that income will go towards paying taxes. The income tax should become a regressive tax because every tax bracket would then pay roughly the same dollar amount in taxes to the government out of income. Everyone paying the same dollar amount in taxes makes all tax payers equal. The negative impact of this is that lower income earners will pay a higher percentage of their income to taxes. This does not necessarily make a regressive income tax unfair.
The main argument in favor of using a regressive tax is that every level of income would pay the same monetary amount of taxes. The dollar amount of a smaller tax on a greater income will be approximately equal to the dollar amount of a large tax on a smaller income. Thus, the regressive tax can be seen as being fair since all citizens will be paying the same amount of taxes. Another reason to convert the income tax into a regressive tax is to teach lower income earners the value of money. To explain, the government implements excise taxes in order to encourage or discourage certain behavior. For example, a higher tax is placed on alcohol and cigarettes to discourage purchase of those items. A regressive tax rate can be compared to an excise tax. If the people who earn less income are taxed at a higher rate, they might realize how important saving money is. This would teach lower income earners better money management by decreasing excess spending. The money the lower income earners will save can help them in the long run.
An argument against regressive tax looks at the “fairness” characteristic from another angle. Instead of looking at the tax and seeing that each income level pays approximately the same
Subject: Argument for Implementing Regressive Income Tax
The primary income taxation structure in the United States should be a regressive tax structure. A regressive tax rate decreases with an increase in the tax base. This means, the lower the amount of income a person earns, the greater the share of that income will go towards paying taxes. The income tax should become a regressive tax because every tax bracket would then pay roughly the same dollar amount in taxes to the government out of income. Everyone paying the same dollar amount in taxes makes all tax payers equal. The negative impact of this is that lower income earners will pay a higher percentage of their income to taxes. This does not necessarily make a regressive income tax unfair.
The main argument in favor of using a regressive tax is that every level of income would pay the same monetary amount of taxes. The dollar amount of a smaller tax on a greater income will be approximately equal to the dollar amount of a large tax on a smaller income. Thus, the regressive tax can be seen as being fair since all citizens will be paying the same amount of taxes. Another reason to convert the income tax into a regressive tax is to teach lower income earners the value of money. To explain, the government implements excise taxes in order to encourage or discourage certain behavior. For example, a higher tax is placed on alcohol and cigarettes to discourage purchase of those items. A regressive tax rate can be compared to an excise tax. If the people who earn less income are taxed at a higher rate, they might realize how important saving money is. This would teach lower income earners better money management by decreasing excess spending. The money the lower income earners will save can help them in the long run.
An argument against regressive tax looks at the “fairness” characteristic from another angle. Instead of looking at the tax and seeing that each income level pays approximately the same
References: "What Are the Pros and Cons of a Regressive Tax?." WiseGeek. Web. Retrieved 31 Aug. 2013 from www.wisegeek.org/what-are-the-pros-and-cons-of-a-regressive-tax.htm. “Regressive Taxes.” IRS. Web. Retrieved August 31, 2013 from http://apps.irs.gov/app/understandingTaxes/student/whys_thm03_les02.jsp